ELC plans to ultimately own 10 liquefaction units and other equipment to be constructed as part of the Elba Liquefaction Project at Kinder Morgan Inc.’s (KMI) existing Southern LNG Co. LLC Elba Island LNG facility near Savannah, GA. KMI had been considering taking a partner in the project for a while.

EIG made an upfront cash payment of $385 million, consisting of reimbursement to KMI for EIG’s 49% share of prior ELC capital expenditures, excluding capitalized interest, and a payment of $170 million in excess of capital expenditures in consideration of the value created by KMI in developing the project to this stage, KMI said Tuesday after the market closed.

The project is expected to cost $1.3 billion, excluding capitalized interest. EIG plans to fund its share of future expenses necessary to complete construction and commission the liquefaction facility.

The project, which began construction on Nov. 1, is supported by a 20-year contract with a unit of Royal Dutch Shell plc, said KMI CEO Steve Kean.

“As we have told the market in past months, this JV is another strategic step toward achieving our stated goals of strengthening our balance sheet and positioning the company for long-term value creation,” Kean said.

Initial liquefaction units are expected to be placed in service in mid-2018, with final units coming online by early 2019. In 2012, the Elba Liquefaction Project received authorization from the U.S. Department of Energy (DOE) to export to free trade agreement (FTA) countries, and on Dec. 16, 2016, DOE issued non-FTA export authority.

The project is expected to have a total capacity of 2.5 million tonnes/year of LNG for export, equivalent to 350 MMcf/d.

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